Crash Proof: How to Profit From the Coming Economic Collapse (Lynn Sonberg Books) (Hardcover)

by Peter D. Schiff (Author), John Downes (Author)
Key Phrases: comforting distortion, reserve currency status, creating inflation, United States, Wall Street, Federal Reserve (more...)

Editorial Reviews

Product Description
The economic tipping point for the United States is no longer theoretical. It is a reality today. The country has gone from the world's largest creditor to its greatest debtor; the value of the dollar is sinking; domestic manufacturing is winding down - and these trends don't seem to be slowing. Peter Schiff casts a sharp, clear-sighted eye on these factors and explains what the possible effects may be and how investors can protect themselves. For more than a decade, Schiff has not only observed the U.S. economy, but also helped his clients reposition their portfolios to reflect his outlook. What he sees is a nation facing an economic storm brought on by growing federal, personal, and corporate debt, too-little savings, a declining dollar, and lack of domestic manufacturing.
Crash-Proof is an informed and informative warning of a looming period marked by sizeable tax hikes, loss of retirement benefits, double digit inflation, even - as happened recently in Argentina - the possible collapse of the middle class. However, Schiff does have a survival plan that can provide the protection that readers will need in the coming years.

From the Inside Flap
From both an economic and monetary perspective, the United States is a house of cards—impressive on the outside, but a disaster waiting to happen beneath the surface. In a relatively short period of time, the country has gone from the world's largest creditor to its greatest debtor; the value of the dollar has declined; and domestic manufacturing has given way to non-exportable services. While these and other issues could potentially spell disaster for your financial well-being, the situation could also present unique opportunities—if you're prepared.

For more than a decade, seasoned Wall Street prognosticator Peter Schiff has not only observed the U.S. economy, but also helped his clients restructure their portfolios to reflect his outlook. What he sees today is a nation facing an economic storm brought on by growing federal, personal, and corporate debt; too little savings; a declining dollar; and lack of domestic manufacturing.

Now, in Crash Proof, Schiff provides you with an insightful examination of the structural weaknesses underlying this impending economic meltdown, and discusses the measures you can take to protect yourself—as well as profit—during the difficult times that lie ahead. Using common-sense analysis, creative analogies, and easy-to-understand language, Schiff entertains as well as educates. While Schiff carefully details the grave economic forces pushing the United States closer to the edge, he also outlines a specific three-step plan that will allow you to preserve wealth and protect the purchasing power of the savings you have worked a lifetime to accumulate.

Step #1: Rethinking Your Stock Portfolio: shows you exactly how to replace your endangered U.S. dollar holdings with a portfolio of foreign securities that are safer, significantly higher yielding, and appropriate for any investment objectives

Step #2: Gold Rush: examines the various ways you can capitalize on the bull market in gold, as well as silver, and explains how these precious metals can add both safety and exciting growth potential to a conservative foreign stock portfolio

Step #3: Stay Liquid: discusses the importance of liquidity in times of financial uncertainty—from having enough money for living expenses to keeping a reserve of uncommitted cash that can be used to acquire assets at bargain prices

Investing using conventional wisdom will not work during times of financial distress. That's why Crash Proof has taken the reality of today's economic situation into account as it offers you guidance. Filled with in-depth insights and expert advice, Crash Proof will help you survive and thrive during the coming years of economic uncertainty.

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Product Details

• Hardcover: 288 pages
• Publisher: Wiley (February 26, 2007)
• Language: English
• ISBN-10: 0470043601
• ISBN-13: 978-0470043608
• Product Dimensions: 9.1 x 6.3 x 1 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars See all reviews (317 customer reviews)
• Amazon.com Sales Rank: #1,091 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

347 of 368 people found the following review helpful:

5.0 out of 5 stars Act Now or Suffer Later, September 24, 2007

By	Tom G (Arizona) - See all my reviews

I enjoyed this book even though I was previously aware of its economic arguments and suggestions for portfolio allocations. Mr. Schiff is passionate and sincere and that tone comes across in the book. For that, thank the excellent John Downes who has co-written several other good business books. Many other reveiwers here discuss the contents of the book so I won't go there.

I worked as a bullion dealer in the 1970's so this is my second "crash" cycle. Many people thought the US would collapse in the 70's due to inflation and a national debt of $1 Trillion dollars. Many thought gold would zoom to the moon. Instead, gold crashed and languished for over 20 years. That's because the US was able to shift gears.

Reagan pulled the US economy up from its tailspin by switching from printing money to issuing debt. He took advantage of the low US debt/GDP ratio to inflate debt by selling bonds to Americans and foreigners. It accomplished the same thing - letting the economy expand with a near infinite supply of cash liquidity. George W Bush then doubled the US national debt to $10 Trillion in only eight years. Low interest rates sucked in the public who took on enormous personal debt.

The US now can't rapidly inflate because the dollar would collapse and can't take on more debt because investors doubt it can be repaid in sound money. People don't accept the possibility of an economic crash because they think the US/Bernake/Fed will always be able to pull another rabbit from the hat. This complacency will lead to disaster for most investors.

The US is tapped out on debt both public and personal. The US has so debased the dollar that it has fallen tremendously since Bush II took office and continued the pattern of reckless spending.

If you don't want to believe Schiff when he warns of what's ahead then listen to Greenspan as he touts his recent autobiography. He states directly that the US will have inflation for the next 25 years. He says the outlook for stocks, bonds, and the general economy is 'gloomy' for the forseable future. He says the dollar will likely lose its reserve currency status. This is "The Maestro" talking. He says it's going to be bad. Schiff tells you how bad and what to do about it.

Some people here crticize Schiff for touting his firm's services. So what. He tells readers what to do, but most won't act for themselves. So, he provides the service. Currently, gold is at 725 (September 2007). That's not cheap, but it won't be cheaper in 2009. The US will have to reduce the rate of gov't spending and that will feed back into jobs and consumption. I doubt that the dollar will totally collapse, but when it's all said and done, we'll get a combination of "manageable" inflation and rising interest rates. Most other nations will also inflate as they prop up their economies and scramble to get their share of the world's increasingly costly oil.

The only asset that trumps oil is gold. Bite the bullet and get your share. Reduce your US stock exposure and don't go within 20 miles of a long-term bond. Your financial advisor will be of little help in these matters. Their loyalty is to commissions. You'll have to start thinking for yourself and acting on it even though it will make your stomach churn and give you a migraine.

I'd suggest a general portfolio of 25% gold (ETF or coins), 50% cash, and 25% international stock index fund. If inflation is gradual, the foreign stock will keep pace. If war or rapid inflation strikes, gold will win big. Hold cash to provide liquidity and to take advantage of opportunity. You shouldn't have to wait too long. The politicians will paper things over until the 2008 election. At least hold enough gold to offset declining purchasing power of a fixed pension. If you need 30k a year to live on, then hold that much gold - at least. Live cheap and get out of debt.

Peter Schiff's book is certainly worth reading. We'll see the truth of that within a few years.

106 of 109 people found the following review helpful:

5.0 out of 5 stars Excellent macroeconomics refresher, solid advice for pessimists, November 23, 2007

By	Bruno "Bruno" (Florida, USA) - See all my reviews

I read this book around early summer after hearing about it on a financial webcast I stumbled accross. Thank heavens I did. I read the author's explanations of what has happened and what will and I have to say that it makes sense to me. I had macroeconomics 25 years ago and barely paid attention but after reading this it all came back to me. Schiff doesn't just preach gloom and doom. He lays out a good case for his predictions. I didn't just trust this book. I read two others that basically say the same things. What I liked was that it validated thoughts and questions I'd had for years.

"how can we all be so wealthy yet save nothing?" "How can we have had such a run up in home prices even though we haven't added that many people to the nation?" "How can inflation be officially low even though so many things have gone way up in price (food, fuel, insurance, education, health care, and even home prices till recently)". "How can we manufacture relatively little and sell each other services and still become more wealthy?" If that was possible I'd stay home and cook my wife meals while she mowed the lawn for me and we'd just get rich that way.

Maybe I just like how Schiff shares my natural pessimism and distrust of politicians being put in charge of our national statistics. But I used a simplified form of his advice, bought gold via ETFs, an international bond fund, with the balance in a treasury money market fund, and in just a few short months I've made quite a bit more than I did in any single year since I've been investing. And unlike in past years, I feel very confident that the trend in my investments is going to be up. The underlying economic picture simply demands that these products will do well. I realize that 3 months of good results (up 20%) does not prove anything, but I read this book way before I heard anything in the news about the dollar decline or housing bubble. Now that I've read the book, I tune in daily and the news just confirms the book's premise.

We have had a debt based too-good-to-be-true affluence. Like a drunken college kid on a spending spree, it will end eventually. The housing bubble alone might not sink us. The consumer credit crunch alone might be something we could work with. But add in the astronomical federal govn't obligations ($50 trillion unfunded?) and it's just a matter of time before the ride gets wild.

I would like to thank Mr Schiff for writing this book. I honestly feel that it has saved my financial future. I am in a business where one cannot work into old age, and instead of seeing my traditional stock investments knocked back down in value, I may actually be able to make a nice profit that will help us get through the hard times ahead.

I'm no expert, just a small business owner, but I looked hard to find an honest rebuttal to this book before investing my money in gold (I dont' want to lose money!) , but all I have been able to find were cheerleading tomes to the stock market that were short on logic and long on boasts and how great things were and still are. I find those to be total BS and so I can't trust their theories. Post a comment here if you know of one who actually makes a good argument for staying in the US stock market.

687 of 753 people found the following review helpful:

5.0 out of 5 stars From a FinancialSense.com listener..., March 13, 2007

By	Patrick M. Hussey (Baltimore, MD, United States) - See all my reviews (REAL NAME)

Peter Schiff, son of American patriot Irwin Schiff, has written a very useful book that can not only assist you to take the concrete steps necessary for financial survival, but also change your individual psychology toward the storm on the horizon that is rapidly gathering strength. Today, we have the illusion of prosperity, and the sooner we break through that delusional state, the sooner we can prepare for darker days.

At this point, there are so many possible triggers for the Second Great Depression, it's striking that it has not already begun. The sub-prime meltdown may just be such a trigger that brings down the house of cards, once it becomes more clear which entities actually hold all the risk created as part of the Housing Bubble. Wall Street, sub-prime lenders, and the large banks have been ingenious in their ability to push risk onto other parties, but it's not clear if the counter-parties will have the ability to weather the defaults. Thus, the risk may yet reside with the banks, which normally would have been more restricted in the number of loans they could create by more traditional standards. So much debt has been created, and so much risk obfuscated, that it is hard to imagine our present illusion of prosperity can be maintained much longer.

Mr. Schiff breaks through our modern mythology by shattering these illusions, and here is where he shines best. A bear's bear, Mr. Schiff steps down from the towers of the economic elite to provide analogies that can be readily digested by more casual readers. The analogy of the Asians and the American trapped on an island together is apropos, as it reveals much about the true state of international trade. The Dollar Bubble heavily distorts trade in favor of America, which benefits disproportionately from the inflated value of the dollar.

Mr. Schiff also understands very well the entitlement crisis brewing, and aptly names Social Security a Ponzi Scheme. Most people in Generations X and Y understand that we're the bagholders scheduled for the Ponzi Scheme, but many Baby Boomers love to be delusional about this tragic farce, thinking it's a form of savings rather than our government writing worthless IOUs to itself and lying to the American people. They think Gen X "owes" it to them! Ha Ha! The sooner we can end social security, the sooner we can start saving real money with real assets. Until then, we are slaves waiting for generational emancipation.

I remember the first time I heard Mr. Schiff speak on CNBC. The discussion was about inflation, and I couldn't help but notice Mr. Schiff's definition diverged significantly from the definition used by the brainless cheerleaders on CNBC, and for that matter, our government and most of Wall Street. The proper definition of inflation is "debasement" and secondarily, "an increase in the supply of money which causes a rise in prices" (Webster's 1982). Note the difference between these two definitions and the more commonly used definition today, which is simply "a rise in prices."

CNBC would have us believe that money supply doesn't matter when you can fool people into believing that the risks associated with exuberant money creation won't be felt by anyone, or only by parties "most able to bear that risk." How convenient! What the government doesn't want you to know is that the Federal Reserve creates inflation, and both government and the Federal Reserve benefit from this inflation at everyone else's expense. In the history of every mania and crash, rampant money creation is behind the genesis of every one. Usually, it takes a unique form. In this case, it was the Housing Bubble. So, inflation and the Housing Bubble are intimately linked. As many have often pointed out, the Housing Bubble was needed to replace the Nasdaq Bubble that popped in 2000-2002.

Finally, the juicy part - how to survive. Mr. Schiff advocates foreign equities that are sound and pay excellent dividends, which due to the Dollar Bubble, might do very well. So long as there is sufficient domestic demand (abroad) after a currency revaluation, this appears good advice. Although, one has to wonder if the U.S. catches cold, would Asians follow?

Next, buy gold and silver, and mining shares. This is pretty standard advice from the "Gloom and Doom" crowd as we are sometimes named. Lastly, he recommends staying liquid, which generally means reducing debt and keeping assets in a form that can be readily converted from one type to another. He recommends leveraging overvalued home equity in other currencies and storing small amounts of imported goods likely to rise in price, and a few other measures.

The piggy bank on the cover is a nice touch, and the list of books for further reading is most helpful for those who have not already read many of the titles.

A very quick read, easy to understand, and very well put together. I highly recommend this book.